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BC Commercial Leading Indicator Ends 2016 on a High Note
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(Posted on Mar 14, 2017 at 02:02AM by Michelle Bogle)
In a recent press release by the British Columbia Real Estate Association (BCREA), the organization released details from its Commercial Leading Indicator (CLI), which forecasts changes in broad commercial real estate activity.Â
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According to the BCREA, the CLI increased for the fourth consecutive quarter, rising 1.5 index points from the third to fourth quarter of 2016. The index now sits at 123.9, a 5 percent increase from a year ago and about a 1.2 percent gain on a quarterly basis.
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The CLI was propelled higher by strong fourth quarter growth in the B.C. economy; specifically, gains in the retail, wholesale and manufacturing sectors. Growth in wholesale trade jumped nearly 12 percent year-over-year in the fourth quarter and was up 5 percent on a quarterly basis. The dramatic increase was the result of higher sales of machinery and equipment, as well increased sales in the food and beverage sector. Retail sales were up 6.6 percent year-over-year and about 1.5 percent on a quarterly basis. Manufacturing sales also increased, rising 2.1 percent on a quarterly basis.Â
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Growth in the CLI’s economic activity component more than offset modest quarterly declines in the employment and financial component. According to the BCREA, Canadian REITs were down about 1 percent at the end of the fourth quarter, while rising short- and long-term interest rates following the US presidential election caused a widening of risk. That combination led to a second consecutive decline in the CLI’s financial component. The CLI measure of office employment was also flat in the fourth quarter, following six months of strong gains. The manufacturing sector shed close to 1,600 jobs in the fourth quarter despite strong manufacturing activity.Â
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However, the underlying CLI trend continues to push higher, signalling further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.Â
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To view the full BCREA Commercial Leading Indicator index in its entirety, please click here. Or, for more insight into British Columbia’s commercial real estate market, please contact Marcus & Millichap’s Vancouver office to speak with an advisor.
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